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TMI Blog2020 (1) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... king the bills after substantial delay proves that these expenditure are not genuine. The confirmation notes and the invoices of brokerage and confirmation note do not prove that services have been rendered. We conquer with the views of the lower authorities that assessee has failed to show the genuineness of the commission payment to M/s. Vidhyashree Buildcon. Thus, we confirm the orders of the lower authorities - Decided against assessee. - ITA No. 4998/Del/2016 (Assessment Year: 2012-13) - - - Dated:- 18-11-2019 - SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.N. CHARY, JUDICIAL MEMBER Assessee by: Shri Gaurav Jain, Adv And Ms Manisha Sharma, Adv Revenue by: Ms. Naina Soin Kapil, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is preferred by the assessee, Ks commodities private limited [ Appellant], against the order of THE COMMISSIONER OF INCOME TAX (APPEALS) 5, New Delhi [ The ld CIT A] dated 11/7/2016 raising the solitary ground of appeal on account of confirmation of disallowance of ₹ 4989000/ out of the commission paid by the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o justify claim of those expenses as according to him those expenses were not genuine and it was excessive and unreasonable. 5. The assessee submitted modus operandi and sale and procurement methodology of each commodities stating that each of the commodities are traded differently. It has therefore distinct characteristics and markets. Therefore commission paid on sale of one commodity cannot be compared with other commodity. It was submitted that the rate of commission on commodities like soya and sugar are different from Maize. It was further submitted that above commission has been recorded on the basis of the contract confirmation note and invoices received from the recipient who has arranged buyers for the assessee for Maize. Explaining the modus operandi of commission and exports that a confirmation note is executed and accepted copies of the terms is duly signed and given to the assessee by commission agent for making export by the assessee and the commission agent raises the invoice. Therefore, there cannot be counter signature of the assessee on it as the payment of the commission concludes the transaction. It was further submitted that the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, he disallowed a sum of ₹ 4989000/ out of the commission expenditure. 7. The assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT (A) who confirmed the above disallowance. Therefore, assessee is in appeal before us. 8. The learned authorised representative submitted the facts of the case and stated that disallowance has been made by the learned assessing officer and confirmed by the learned CIT (A) for the simple reason that commission was found to be excessive and the genuineness of the same was doubted. He referred to the reason of the learned assessing officer that commission has been paid to the above entity at ₹ 750 per metric ton whereas the sale price of the maize as per the confirmation note fluctuates between ₹ 258 per metric ton to ₹ 285 per metric ton which does not commensurate . In response to this he submitted that as per the confirmation note the rate of commission is specified at INR 7 50 per metric ton whereas the rate of export of maize is specified in US dollar and not in Indian rupees accordingly the commission paid is lower than the sale pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice was merely a typographical error however, other particular such as quantity and rate of commodity were correctly stated in the invoices. He further referred to the allegation of the learned assessing officer that the recipient of commission was apparently engaged in the business of construction and not in the agricultural commodities and assessee has not produced any evidence showing that the commission has been offered to tax by that recipient or tax deduction at source there from has been made by the assessee, he submitted that commission income was duly recorded in the books of accounts of the recipient who also offered the same to taxation. He further stated that tax deductions at source are also made by the assessee and the confirmation has been obtained from the broker. Merely because the commission agent is engaged in any other activity, it could not be said that the agent had not rendered any services to the assessee company. For this proposition, he relied upon the decision of the coordinate bench in 125 ITD 309. He further stated that the allegation of the learned assessing officer is without any basis that no proof of service actually has been rendered by the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that other income is merely an interest income of INR 1 487208. He further referred to the profit and loss account and shown that it has shown very meager expenditure which itself suggest that such kind of services cannot be rendered to the assessee by the broker. Therefore, he submitted that assessee has failed to show that any services have been rendered by such company. He stated that even otherwise there is no reference that which clients were contacted by the broker to whom the maize is exported. He therefore submitted that the total transaction of the commission payment for the reasons given by the learned assessing officer and the learned CIT A clearly shows that the payment made by the assessee is completely bogus and excessive. 10. We have carefully considered the rival contention. The facts have already been stated adequately in the year paragraphs. The only issue is about the allowability of commission expenditure paid by the assessee of ₹ 4989000/- by assessee to M/s. Vidhya Shree Buildcon Pvt. Ltd for four consignments of export of maize in the month of May 2011 and August 2011. In the present case the contentions of the assessee are that paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given. The assessee has paid meager salary of ₹ 1.47 lakh and other expenses also do not show any substance in the company to earn the revenue in the form of commission of ₹ 4989000/- from the assessee. Even before us no evidence were lead to show that the directors of the company Mr. Pankaj Jain and Mrs. Vaishali Jain are capable of obtaining such a huge orders of export of maize for assessee. Their biodata or their credentials were also not shown that they have any experience in the commodity market. Further, there is no confirmation from the importers of the Bangladesh to show that the assessee engaged the above broker for export of maize. The assessee did not produce on its own when the renditions of the services are in doubt. The directors of the broker company to establish that they know the importers in Bangladesh or they have an experience of commodity market. Coming to the ledger account of the above broker it is apparent that the bills of Vidhyashree Buildcon were booked in the month of March when the export has taken place earlier. Though, the payment may be at the convenience of the parties or at the time of availability of funds but the booking the bills ..... 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